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Warehousing Management

Concept of warehousing
Distribution centre

Types of Warehouse
Basis of ownership- Private and Public warehouses
Basis of Services
Bonded warehouse
Field warehouse
Cold Storage
Distribution warehouse
Buffer storage warehouse
Export and Import warehouse
Warehousing Management

Factors Public Warehouses Private Warehouses

Operating Costs Higher due to inclusion of profits 10-15% lower

Initial investment Nil Large facility, startup, equipments,

trained personnel
Control Good Direct responsibility over
personnel and procedures
Risk Minimal Risk of obsolescence due to
change in technology or demand
Tax advantages Free-port states Depreciation allowance

Economies of sale Possible to serving many Dependent on company volume

Consolidation of Can do to a warehouse and None
shipments finally to a customer
Storage and Know exact charges for decision- Generally estimated
Warehousing Management
• Functions of warehousing
• Economic Functions
• Consolidation
• Break Bulk
• Stockpiling
• Value-added Service

• Operational Functions
• Receiving of goods
• Recording of goods showing stock position
• Storing of goods at an appropriate place with proper identification
• Handling of goods
• Order receiving, processing and filing
• Marshalling of goods to various customers
• Despatching
• Preparation of shipping documents
• Ensure Legal functions
Warehousing Management
• Warehousing Strategy
• Making available goods to customers
• Degree of customer service
• Minimum total distribution costs
• Demand pattern
• Buying behaviour of customers
• Reaction of customers
• Warehousing strategies of competitors
• Financial and other resource constraints
• Brand equity
• Warehousing facilities required
• Centralised or decentralised warehouses
• Location of the warehouses
• Cost of warehousing
Warehousing Management

Sl. Centralised warehouse Decentralised warehouse

1 Need not carry large inventory Market coverage will be maximum
2 No stock-out situation Maximization of customer service-
leading to high level of loyalty and
3 Demand variations in different Transportation cost will be moderate
market segments can be met at due to bulk transport
short notice
4 Control on inventory is efficient Better control over market
5 Warehousing costs will be low
Warehousing Management

Sl. Centralised warehouse Decentralised warehouse
1 Transport cost is maximum unless Huge investment on inventory
moved in bulk quantity
2 Distant market demands cannot be Huge warehousing development
met in short notice costs

3 Loss of customer service Transportation cost will be moderate

due to bulk transport

4 Poor market coverage and Shortage of goods at one warehouse

replenished from another may add
additional transport cost
5 Poor control on the market
Warehousing Management
• Factors for selection of Number and location of warehouse
• Number of production plants and the distance from the markets
• Infrastructure required in the warehouse and the type of transport needed
• Limited products and clustered
• Nature and quality of goods to be stored
• Brand Loyalty
• Financial strength of the company
• Flexibility of modifying the facilities of the warehouse
• Degree of service to customer
Warehousing Management
• Warehouse Design
• Products in terms of Quantity and character
• Estimation of the future expansion
• Identification and selection of material handling facilities
• Purpose of the facility
• Layout of the facility
• Space required
• Communication requirements
• Rail connectivity
• Safety features